GCG’s Q4 2022 Healthcare Industry Update provides an overview of the latest trends in the sector, including recent performance, valuation multiples, and the state of the middle-market M&A environment.
Key findings include the following:
- Q4 2022 saw modest losses in public equities across the Healthcare landscape that were in line with the broader equity market. Inflation and interest rate concerns continued to persist in the market, however, some Healthcare sectors recorded positive gains in the quarter. The Managed Healthcare sector recorded an average gain of 1.9% in the quarter, substantially outperforming the broader market.
- Q4 2022 middle-market M&A deal volume remained stable from Q3 and Q2, while average deal value decreased slightly. Q4 2022 deal volume was down 28% compared to Q4 2021, but the average deal value remained resilient over the past year. Strategic buyers continue to comprise a majority of the overall deal activity, representing 77.3% of total transaction volume in the quarter while financial buyers continue to deploy capital into the market.
- Based on a representative set of publicly traded companies in the Healthcare industry, public companies traded at an average multiple of 13.0x EBITDA and 2.9x revenue in Q3 2022, both up QoQ. Additionally, two of the strongest sectors in the Healthcare industry were Assisted Living/Long-Term Care and Medical Equipment sectors with an average multiple of 18.4x and 16.8x EBITDA, respectively.
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